Section A: answer Question 1.Section B: answer three questions.
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INFORMATION● The total mark for this paper is 90.● The number of marks for each question or part question is shown in brackets [ ].
Each question is introduced by stimulus material. In your answers you may refer to the material and / or to other examples you have studied.
2 Nearly one million people in Cairo, the capital city of Egypt, live in crowded, unhealthy housing. One reason why people lack basic necessities, including adequate housing, is unemployment. In 2019, nearly 10% of Cairo’s workers did not have a job. Other citizens of Cairo live in luxury, in houses costing more than $1 million. Many of Cairo’s rich adults grew up in rich families.
(a) Identify two basic necessities, other than housing. [2]
(b) Explain how frictional unemployment differs from cyclical unemployment. [4]
(c) Analyse why the children of the rich tend to become rich adults. [6]
(d) Discuss whether a government should provide subsidies to families to spend on housing. [8]
3 Consumers in Uruguay are eating more processed foods. Factors of production, including enterprise, have responded to this change. Firms in the processed food industry have become more capital-intensive. All of Uruguay’s industries were affected by the rise in its inflation rate, from 6.2% in 2017 to 7.7% in 2018.
(a) Define enterprise. [2]
(b) Explain the influence of opportunity cost on consumers’ decisions. [4]
(c) Analyse why a firm may become more capital-intensive. [6]
(d) Discuss whether inflation harms a country’s industries. [8]
4 Turkey’s birth rate is falling which is likely to reduce its supply of labour. However, improvements in the quality of labour and the increase in foreign multinational companies (MNCs) operating in Turkey (the host country to the MNCs) may help the economy avoid a recession. One reason why economists are worried that a recession may occur is an expected rise in the interest rate.
(a) Define birth rate. [2]
(b) Explain two causes of an increase in the quality of labour in a country. [4]
(c) Analyse how a rise in the interest rate could cause a recession. [6]
(d) Discuss whether or not MNCs improve the economic performance of the host countries in which they operate. [8]
5 The money supply in Bangladesh increased every year from 2010 to 2018. Changes in the money supply and the foreign exchange rate can affect a government’s macroeconomic policy aims, including full employment. There have been few mergers between commercial banks in Bangladesh, although its banks are larger than many of its other firms.
(a) Identify two functions of money. [2]
(b) Explain two reasons why commercial banks may want to merge. [4]
(c) Analyse how a fall in a country’s foreign exchange rate could increase employment. [6]
(d) Discuss whether or not it is an advantage to keep a firm small. [8]
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